State-owned Coal India Ltd (CIL) is likely to do away with the dual pricing system for e-auctioning of coal. Under a new coal distribution policy, non-core sector companies with linkages and participating in e-auction process will now get coal at the e-auction price rather than the present weighted average of e-auction price.

?The new coal distribution policy has got the approval of the Prime Minister?s Office (PMO) and is likely to be notified next week. In the new policy, there will be only one pricing system instead of the dual pricing earlier prevalent.? a senior government official told FE.

CIL and its subsidiaries approximately sold 20 million tonne of coal through e-auction.

Under the original draft new coal distribution policy, the coal ministry intended to increase the quantum of coal sold through auction to 50 million tonne by cutting linkages to power companies.

But, due to stiff opposition from the power ministry, the PMO did not approve the proposal.

There are three categories of prices prevalent in the coal sector, notified prices, weighted average of e-auction prices and e-auction prices. Core sector gets coal at the notified prices.

Earlier, non-core sector companies having linkages used to get coal at a weighted average of e-auction prices, where as non-core sector companies without linkages used to get coal at e-auction prices.

The discrimination in prices prompted the Supreme Court to issue a ban order on e-auction of coal in December 2006, noting that the present system is weighted entirely against the small scale industries and in favour of big companies.

?Consumers belonging to core sectors such as power, steel, iron and chemical are big companies like Grasim, Hindalco and Jindal Steel who are taking part in the e-auction as a result whereof the price of coal has shot up at the cost of small scale industry (SSI) units,? the apex court had observed in its order. CIL initiated e-auction of coal in 2004 for non-core users and it proved to be fruitful as it helped the loss-making Bharat Coking Coal Limited (BCCL) augment profit and thus CIL continued e-auction until it was stopped by the apex court.